Renovations Halted by Recession Leave Homes in Limbo

RISMEDIA, November 4, 2010—(MCT)—Ralph and Gloria Dickerson began a $150,000 expansion of their Englewood, N.J., house in 2004. But the work dwindled to a halt several years ago, and foreclosure proceedings were started on the house last year. The property now sits empty, with exposed insulation wrap outside, peeling paint inside and signs on the lawn announcing: “For sale by owner.” When home renovations stall, properties like this turn into white elephants. If they go on the market, their unkempt state scares off many potential buyers. And in the meantime, neighbors fume at the eyesore in their midst.

“Are the neighbors upset? That’s the understatement of the year,” said Charles Klatskin, an industrial real estate broker who lives near the Dickersons’ house, in a neighborhood of large, graceful homes assessed at $1 million and up.

Municipal building codes generally require that home additions and renovations be completed within a certain period, and building officials typically fine homeowners who don’t comply. But enforcement can be tricky.

“How can you make someone spend money on their homes if they don’t have it?” asked Gary Montroy, construction official for Mahwah, N.J. In the most extreme cases, involving safety issues, the town can levy fines of up to $2,000 a day, he said. In one such case, Montroy is dealing with a homeowner who left a big job incomplete—including a pool that is not properly protected by a fence. After several years of fines, the homeowner now owes the town more than $350,000. The house is worth about $800,000, Montroy said. “We sent him violation notices; he ignored them,” Montroy said. “He has financial issues; I understand that. But all he needs to do is put up a chain-link fence. I don’t care about ‘pretty.’ I care about ‘safe.’”

Montroy says that if the homeowner puts up the fence, he will negotiate the fine to a more affordable level—probably around $10,000, he said. If this homeowner doesn’t comply, he said, the town could foreclose on the property to pay the fine, or the Municipal Court could order him jailed.

Some owners try to sell their unfinished homes. But that’s also complicated. Barbara Ostroth of Coldwell Banker in Oradell, N.J., for example, has a listing for a half-renovated house. The owners started an ambitious updating project more than 10 years ago, but the work stalled when the couple split up. Though the house has central air conditioning and three renovated bathrooms, some of the rooms remain stripped to the framework.

Now the three-bedroom house is on the market for $307,000. A contractor estimated completing the job would cost $80,000-$90,000, Ostroth said. “The buyer for this house is not someone who’s in the $300,000-$325,000 price range,” she said. “The buyer is in the upper-300s price range, with the imagination to see how it can be completed. The buyer has to be willing to take that on.”

Some half-finished renovations end up so badly damaged by rain and snow that they can’t be salvaged, building officials say. Beyond that, many buyers just don’t want the trouble of completing a renovation when there are plenty of move-in-ready houses on the market.

“Most buyers do not have the vision to see a partially finished home become a reality,” said Jay Shapiro, an agent with Prominent Properties Sotheby’s International Realty in Tenafly, N.J. He has worked with buyers who considered, and rejected, such homes. “Many buyers today do not have the time, skills or inclination to finish a home on their own,” Shapiro said. “If the buyer is neither a professional nor skilled in home improvement, trying to get the right contractor to price, execute and finish the job both on time and to the buyers’ satisfaction is fraught with danger.”

While these homes wait for a buyer, neighbors can feel exasperated by the lack of progress on the reconstruction. That’s certainly the case near the Dickerson house.

According to public records, the Dickersons got a building permit in June 2004 for a second-story addition, expansion of the kitchen and dining room and addition of a “hearth room” and deck on the first floor. They estimated the cost at $150,000, and started work.

Scott Mager and his wife bought the house next door to the Dickerson house in December 2005, and have seen no progress on the renovation since then. In fact, he said that he got the city to reduce the assessed value of his home, based on the condition of the Dickerson house. His home is currently assessed at $2.4 million, down from $2.5 million in 2009. “The fact that I have this thing next to my house is reducing its value significantly,” said Mager, CEO of a New York building-maintenance company.

The city Building Department has issued violation notices on the property and is continuing to investigate, according to Englewood Mayor Frank Huttle. “These situations shouldn’t arise, but obviously they’re there for a reason; obviously, the property owners must have some issues,” he said. “Action needs to be taken, because the property can’t stay in the state it’s in.”

The house, which is assessed at $1.66 million, was on the market for just under $2.5 million in 2007 and 2008, according to the former listing agent, Mary Lenk of Prominent Properties Sotheby’s International Realty in Alpine, N.J. Its current asking price could not be determined, because calls to the phone number listed on the “for sale by owner” sign were not returned.

Ridgeview Builders of Kearny, N.J., worked on the addition, but owner Jose Abreu said the Dickersons failed to pay all they owed him.

Abreu went to court and got a judgment against them for $13,400 in early 2008, but is not optimistic about his chances of collecting. “It looks like they don’t have anything for us to go after,” he said. His lawyer, James Cleary, said that since the home is in foreclosure, the lender’s claim would come before the builder’s.

The foreclosure proceedings were started in March 2009 by Merrill Lynch Credit Corp., which wrote a $1.2 million mortgage on the property in 2004. The law office representing Merrill Lynch said the case has not been resolved yet.

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